1. Government of Pakistan Ministry of Environment
Clean Development Mechanism (CDM) and Government Initiatives for Promotion of CDM Project Activities in Pakistan Syed Amjad Hussain Acting Head, CDM Cell
Government of Pakistan
Ministry of Environment
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan

2. Overview Presentation
Part-1
Climate Change/Global Warming
UNFCCC and Kyoto Protocol
CDM and CDM Project Cycle
Benefits from CDM
Types of CDM Projects
Government Initiatives for Promotion of CDM Activities in Pakistan
Part- 2
Criteria for Host Country Approval Process in Pakistan
Tax and Credit Sharing Policies
CDM Project Approval Process
CDM Projects in Pipeline in Pakistan
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan

3. Part 1: Climate Change and CDM
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan 3

4. Climate change/Global Warming
The Greenhouse Effect
Some gases naturally exist in the atmosphere, the so called Greenhouse Gases (GHGs) that form a blanket surrounding the earth and keeps the earth warmer. This is called Greenhouse Effect.
The Enhanced Greenhouse Effect
Human activities (fossil fuel burning, depletion of sinks like forests etc.) has been increasing the concentration of GHGs in the atmosphere and is leading to rise in temperatures. This is called Enhanced Greenhouse Effect.
Global Warming/Climate Change
Rise in temperatures of earth and other associated climatic changes as caused by the Enhanced Green House Effect is called “Global Warming” and in broader term “Climate Change”.
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan 4

6. Scientific Evidence of Climate Change/Global Warming
The 4th Assessment Report of IPCC (2007) indicate that
Global temperature rises of 2 – 4.5 °C are almost inevitable due to increased concentration of green house gases as caused by human activities (fossil fuel use, land use changes etc.).
The above global warming (or in broader term Climate Change) is expected to have serious consequences for:
- Agricultural production
- Biodiversity
- Heath
- Sea Level rise
Poor will be most affected by the Climate Change
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7. International Response
The United Nations Framework Convention of Climate Change (UNFCCC)
Adopted in June 1992 by over 180 countries at the “Earth Summit” in Rio de Janeiro, Brazil.
The Convention was signed by 154 states (including Pakistan) and entered into force on 21st March, 1994.
UNFCCC is a non-binding legal framework:
- Aims at stabilization of GHG concentration in the atmosphere at safe level.
- To balance out the response along mitigation and adaptation
measures
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan 7

8. The Kyoto Protocol of UNFCCC
Adopted in Kyoto, Japan in 1997 and ratified in February 2005
(Pakistan singed the Protocol on 11th January, 2005)
The Kyoto Protocol: Aims to reduce GHG emissions by 2012 and distinguish two types of countries:
Annex-I countries: With binding emission targets (industrialised countries):
Western and Eastern Europe, Canada, Japan, New Zealand, Russia, Ukraine etc.
Non-Annex I countries: With voluntary participation (developing countries):
China, India, Pakistan, South Africa, Philippines, Uruguay, Brazil, and other developing countries.
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan 8

9. The Kyoto Protocol Targets
Under the KP the Annex- I countries have been given binding targets: i.e. to reduce their combined GHG emission by 5.2 percent below their 1990’s level, between the period
USA % EU % Japan %
All Developed Countries %
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan

10. Mechanisms Under the Kyoto Protocol
The Kyoto Protocol introduces three market based flexible mechanisms for the emissions reduction:
- Joint Implementation (JI),
- Emission Trading Scheme (ETS) and
- Clean Development Mechanism (CDM)
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan 10

11. Clean Development Mechanism (CDM)
CDM is a market based instrument under the Kyoto Protocol of UNFCCC:
Assists developing countries in sustainable development while at the same time contributing to the ultimate objective of the Convention.
Developed countries to support project activities that reduce GHG emissions in the developing countries in return for Certified Emission Reductions (CERs)/ Carbon Credits.
The CERs generated by such project activities can be used
by developed countries as credits to meet their emissions
targets under the Protocol.
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan 11

12. Concept of CERs/ Carbon Credits Developing Country (Host)
Sold to Developed country ($)
CERs
GHG reduction
GHG Emission Projections
Baseline Scenario
CDM Project
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13. Eligible GHG’s Reduction under Kyoto Protocol
The KPs emissions targets cover the six main GHGs:
Name Formula GWP (CO2 eq.)
1. Carbon- dioxide (CO2)
2. Methane (CH4)
3. Nitrous oxide (N2O)
5. Per- fluorocarbons (PFCs) 92,00
4. Hydro- fluorocarbons (HFCs) ,700
6. Sulphur hexafluoride (SF6) ,900
Sinks (carbon sequestration)
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan 13

14. CDM Project Cycle Project Identification and Formulation of PDD
Validation
Implementation and Monitoring
Verification & Certification
Executive Board
Host Country Approval
National CDM Authority
Designated Operational Entities
Registration
Project proponents
Project Identification and Formulation of PDD
Issue CERs
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan 14

15. Time Required for Completion of Different Component within CDM Project Cycle
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan 15

16. Benefits from CDM (Carbon Finance)
(An Example)
Benefits to Host country
CDM Project
(e.g., alternate energy
production)
Additional
Energy
Production
Direct
Foreign
Investment &
Revenue
Certified
Emission
Reductions
Carbon Credits
(Developed
country Buyer)
Plus other Benefits
(Jobs, Clean Env.
Tech. Transfer)
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan 16

17. CDM Incentive for Developed Countries
Developed countries have been subjected to legally binding emission targets…..2008/12.
Due to un-localized nature of CO2…it does not matter for environment where reduction occurs.
Costs of abatement or reduction of emissions :
Developed Countries : U$ /ton (estimated)
Developing Countries : U$ 1-15/ton
Reductions of GHG is much cheaper in developing countries.
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan 17

18. CDM Incentives for Developing Countries
Capitalize an “unvalued” commodity…… CERs
“Additional” financing for local Sustainable Development priorities and as such has potential of “Catalyzing” large Foreign Direct Investment (FDI) flows
Instrument for “appropriate” Technology Transfer
Linkage with local environmental issues – (air pollution etc.)
Financial viability ~ Carbon financing can increase project Internal Rate Returns (IRRs) between 0.5 to 50% (WB)
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan 18

19. Types of CDM Projects
Unilateral, Bilateral and Multilateral CDM Projects are allowed in following sectors
Energy
- Renewable/alternate energy,
- Energy efficiency/conservation, and
- Fossil- fuel cogeneration
Waste Management
- Landfill gas capture
- Recycling
- Energy from solid waste etc.
Transportation
- Alternative fuel vehicles
- Mass transit systems
- Cleaner engines, CNG
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan 19

20. Cont---
Industrial processes (Steel, Fertilizer, Textile etc.)
Land Use, Land Use Change and Forestry (watershed management, sustainable forest management, Afforestation and reforestation)
Agricultural and livestock practices
Any other project resulting in GHG mitigation or carbon sequestration.
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan 20

21. CDM Prospectus of Energy Efficiency in Industrial Sector of Pakistan
The main types of EE projects are:
Demand Side
Retrofit new efficient lighting,
Reduce energy losses in process,
introduce new efficient appliances
Supply Side
Improve efficiency of generator,
Upgrade transmission line and transformers to reduce losses,
Upgrade steam boiler for greater efficiency
Fuel Switching
Replace coal boilers with gas-fired units,
use Biofuels instead of diesel.
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan

22. CDM in Pakistan Pakistan ratified Kyoto Protocol in January, 2005
Ministry of Environment has been declared as Designated National Authority for CDM D. G. (Env.) is the “Focal Pont” for DNA
CDM Cell has been established under DNA for promotion of CDM, and for policy/ technical support to DNA.
Pakistan National Operational Strategy for CDM has been approved in February 2006 (
Pakistan has granted Host Country Approval to fourteen (14) CDM projects and more than 60 CDM projects are in process of development which require host country approval in future
Several capacity building/ awareness raising initiatives have been conducted under this project
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan

23. Project: Establishment of CDM Cell in the MoE
Funding: Public Sector Development Programme (PSDP)
Period: 3 years (July June 2009).
Budget : Rs million.
Objectives:
Strengthening of Clean Development Mechanism (CDM) Cell in the Ministry for implementation of Pakistan National Operational Strategy for CDM.
Capacity building and awareness raising of public/ private stakeholders in CDM activities under the Kyoto Protocol of UNFCCC.
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan 23 23

24. Progress made so far:
CDM Cell, Ministry of Environment has organized the following seminars/workshops/symposiums for awareness and capacity building for GHGs Emission Reduction in Pakistan during the last three years;
Workshop on ‘The Climate Change and Natural Resource Management in June 2007.
Workshop on ‘Carbon Credits Potential in Oil and Gas Sector of Pakistan in September
Workshop on ‘Carbon Credits Potential in Cement Industry of Pakistan in January 2008.
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan 24 24

25. Workshop on ‘Carbon Credits Potential in Sugar Industry of Pakistan in April 2008.
Workshop on “Carbon Credits Opportunities in industry Sector of Pakistan in August 2008
Workshop on “Carbon Credits Opportunities in Wind Sector of Pakistan in August 2008.
Seminar on “Climate Change and Greenhouse Gases (GHG’s ) Mitigation Options under the Kyoto Protocol” for creating awareness among the student community in all Universities like Quaid-i-Azam University, Pir Mehr Ali Shah University of Arid Agriculture, Fatima Jinnah University, International Islamic university and Bahria University.
An awareness raising seminar on Climate change and Clean Development Mechanism in Agricultural Sector of Pakistan at NARC, Islamabad.
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan

26. 1) Steel Industry of Pakistan 2) Textile Industry of Pakistan
Following workshops have been planned in provincial headquarters and industrial hubs of Pakistan in all CDM eligible sectors for awareness raising and enhancement of CDM project activities for national sustainable development and controlling environmental pollution.
1) Steel Industry of Pakistan
2) Textile Industry of Pakistan
3) Alternate and Renewable Energies
4) Waste Management Sector of Pakistan
5) Power Sector of Pakistan
6) Paper and Pulp Industry of Pakistan
Given Host Country Approval to 14 CDM Projects
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan

27. CDM Capacity Building Initiatives
Project Name
World Banks Project for Capacity Building for Development and Implementation of
Carbon Finance Projects under Japanese Policy and Human Resource Development
Grant
Period
18 Months
Budget
US$ 0.57 million
Aims and Objectives
1. Strengthening of institutional framework and enabling environment to promote public and private participation in the carbon market.
2. Training/Workshops for enhancement of capacities of local stakeholders (public institutions, private investors, NGOs etc.) in CDM project development.
3. Support CDM project preparation and development in priority sectors: Energy, waste management, industries, forest and agriculture).
Progress Made so Far
The Action Plan for the project has already been prepared.
The institutional and financial arrangements for the execution of project have been approved.
Capacity building workshops have been organized
Current Status
Consultant Firm i.e. WINROCK International has been hired. And is in process of implementation
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan

28. (Cont…)
Project Name
Institutional Capacity Enhancement for CDM in Pakistan.
Period
18 months
Total Cost
US$ million
Project Implementation
Grant from Royal Norwegian Embassy through United Nations Industrial
Development Organization (UNIDO)
Objectives
To build institutional capacities in Pakistan for addressing climate change; through enhancement of the DNA/CDM in the Ministry of Environment for better management of CDM process and increasing the capacity of CDM Project developers
To tape the GEF funding to give a kick-start to initiating the process of developing second national communication to UNFCCC.
To tape donor funds to initiate the process of developing national policy/ action plan for climate change mitigation and adaptation as envisaged under national environmental policy.
Progress Made so Far
Ministry of Environment, UNIDO and Economic Affairs Division have
approved the project documents.
Current Status
The project is in process of implementation now
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan

29. (Cont…)
Project Name
Hands on Capacity Building of Forest Official in Developing Proposals for Afforestation/ Reforestation Project Design Documents (PDDs) under CDM
Period
Total Cost
Rs million
Funding
Swiss Agency for Development Cooperation through Inter- Cooperation,
and Ministry of Environment
Objectives
To build capacity of Provincial Forest Departments to develop and manage CDM projects in forestry sector o Pakistan.
Progress Made so Far
Three training sessions have been organized
National Definitions have been developed of CDM forestry
Draft Project Design Documents have been completed
5 A/R CDM Projects will be readily available in May-June, 2009.
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan

30. Memorandum of Understanding (MoU)
Government of Pakistan has signed a Memorandum of Understanding (MoU) on Cooperation in CDM with Japanese Carbon Fund (JCF) through Japan Bank for International Cooperation (JBIC) has been signed in July 2008.
Government of Pakistan has signed a Memorandum of Understanding (MoU) in August 2008 with CAMCO International for the realization of CDM projects in Pakistan.
A number of similar MoU for promotion and enhancement of CDM Project Activities in Pakistan
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan

31. Part 2: Criteria for Host Country Approval in Pakistan
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan 31

32. Criteria for Host Country Approval
Consistency with the national laws and sustainable development policies, strategies and plans.
No obligation of the GoP to the investors other than CERs.
Environmental Criteria
Significant reduction in the emissions of GHGs
Conservation of local resources and/or improvement of the local environment.
Social Criteria
Poverty alleviation, jobs creation, benefits to local communities etc.
Economic Criteria
Positive impact on balance of payments (not result in net increase in external debt burden), cost effective.
Technological Criteria
Technology and know how transfer
Not result in import of obsolete technology
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan

33. Tax and Credit Sharing Policies
No income tax or duty on transfer/ sale of CDM emission credits
Credits to be awarded fully to the project sponsors
Banks and other financial institutions to be encouraged to provide special incentives to CDM Project Proponents
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan

34. Project Approval Process
Project proponent has to submit CDM Project Design Documents (PDDs) to the DNA.
Mr. Jawed Ali Khan, Director General (Environment), Focal Person of DNA
The Submitted CDM project will be evaluated according to National CDM Criteria.
Letter of approval will be issued by DNA within one month of the project submission.
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan

35. Host Country Approval to 14 CDM Projects
Catalytic Nitrous oxide Abatement at the Tail Gas End of Pakarab Fertilizers (Pvt.) Ltd, Multan. The project got registered with CDM Executive Board in November 2006.
Cattle Waste Management, Landhi Cattle Colony, Karachi, Pakistan.
84 MW New Bong Escape Hydropower Project in Azad Jammu and Kashmir.
Pakarab Fertiliser Co-generation Power Project, Multan
Generator Change Project at Maple Leaf Cement Company Limited, Mianwali.
Fuel Switch and Energy Efficiency Project at Prosperity Weaving Mills Limited.
Construction of additional cooling tower cells at AES Lal Pir (Pvt) Limited, Muzaffar Garh, Pakistan.
8. Almoiz Bagasse Cogeneration Project, D. I Khan, Pakistan.
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan

36. 11. Gul Ahmed Combined Cycle Gas Turbine Project, Karachi.
9. Fuel Switch to a less Carbon Intensive Fuel at S. Fazalilahi and Sons Pvt Limited, Karachi
10. Community-Based Renewable Energy Development in the Northern Areas and Chitral, Pakistan.
11. Gul Ahmed Combined Cycle Gas Turbine Project, Karachi.
12. Composting of Organic Content of Municipal Solid Waste in Lahore.
Biogas-based Cogeneration Project at Shakarganj Mills Ltd., Jhang.
Installation of natural gas based cogeneration system at Century Paper & Board Mills Ltd., Lahore.
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan

37. Expected Benefits from these 14 CDM Projects in Pakistan
Foreign direct investment = US$ 345 million
GHG Reduction = 3.35 million tones per annum
Other sustainable development, social, economic and environmental benefits to Pakistan.
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan

38. CDM Projects in Pipeline
More than 60 CDM Projects are in Pipeline in different sectors
Energy (Efficiencies/Renewable/alternate energy) 35 Projects
Waste Management/Industrial Processes Projects
Afforestation/Reforestation CDM Projects
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan 38

39. Ways Forward for Promotion of CDM Projects in Pakistan
There is need of identification and assessment of CDM potential in all CDM eligible sectors of Pakistan
Need more Awareness raising workshop/Seminars
Capacity building initiatives for Project Design Documents (RDD) for both public and private sectors need to enhance CDM Projects activities in Pakistan
Development of policies to encourage CDM projects in all relevant sectors
Development of a strong supportive institutional framework
Develop Programmatic and Bundling Approaches for CDM Potential sectors of Pakistan
Enhance the portfolio of potential CDM Project through public/ private partnership like development of linkages among all stakeholders of CDM
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan

40. Contact DNA- Pakistan Clean Development Mechanism Cell
Ministry of Environment, Govt. of Pakistan
4th Floor, ENERCON Building,
Sector: G - 5/ 2, Islamabad.
Ph:
Fax:
Web:
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan

41. THANK YOU
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan 41